Excerpts from the book ‘Designing Organizations: An Executive Briefing on Strategy, Structure and Process” Jay R. Galbraith — 1“ Edition. Copyright @ 1995 by Jossey-Bass, Inc., Publisher, 350 Sansome Street, San Francisco, California 94104.j ! 1 00001 Introduction Four Immutable Forces Shaping Today's Organizations This book is about designing effeccve organizations. Ic emplaa sices that dostgn is a kev cask of the leader i suggests chat ef corganizacions are necessary tor compereiveness are that they are a growing source for compenitiwe advantage. The focus af the book is cherefore on equipping leaders with che understanding ane che cools necessary to create orgamsattons that ore super t0 these ot cheir compenroes. A iow years ago, top managers were not enterested in a tion, lec alone in acquiring a superior understanding of ie or killin iss creation, Organization was perceived to be something about charts and job descripcions-=necessary eviis or bureaucratic acciv- ities. Then someching happened chat propelled organizing to the cop of management's agenda. That something is illustraced by the graph shown im Figure 1.1 “The staph shows thar mast developed countries began invest- ing more ai rheie gross domestic product (GDP) in research anc development (R&D}. These countries were moving to higher value-added products, while developing councries adopred fess sophisticated, higher Iabor-coneent products. This phenomenon continues coday. The increased invesrment in R&D has awo implications. Fis the companies in developed countries create value for customersDESIGNING ORGANIZATIONS FIGURE 1.1. Percentage of Gross Domestic Product Invested in Research and Development in Developed Countries 30 | [pr // i/ ! | Mi | / oman j / pan (1st * | | oo L 19621965187 FBT e195 See 1000 Sores Corouste.M. Land Laces. K. 195%, p36: Bhames Week June 1992 by parting knowledge and design into their products, This “know! edge difference” can be illuscrared by comparing the microproces- sor wich che dyname random access memory (DRAM), boch semiconductor products consisting of equal numbers of cansistors ona chip. The DRAM, however, isa blank commadia chip awart- ing information, The microprocessor, in conerast. concains sophus- ‘ucated carcuit designs and archivecrures to achieve unbelievably fast compucations, and it sells for ten ames the price of the commodity DRAM chip, The circuic designs on the microprocessor represent the brains and energy of the engineers who created ther, It i they who cre- ate value for cuszomers in che new eeanomy. So the assets of Incel and Mororola are che knowledge and energy of the engi neers wi Teal and Motorola to compere in the new econom: ability attract. FOUR IMMUTABLE FORCES 3 90002 retain, motivate, and coordinate calented engineers. In shore, it depends on organization of the efforts of these engineers. Second, the R&D investment raises the fixed costs of doing business For many companies in many industries domestic demand isno longer sufficient to cover ali of their fixed costs. These com- panies must seek addicional demand outside their home countries ‘When a lot of companies expand into other countries the resus heightened global compention. Today, in addition to traditional domestic ivals—chose thac have survived—there are Japanese and European rivals. fn the 1990s ¢ is expected that muilinationals from Korea, Taiwan, Malaysia, the ASEAN councnes, and even- ~ twally Chuna will aso appear. These new competitors often play by different rules, They also give our customers more choxces. As cus romers leam how to benelic from the greater range of choices, sup- pliers need to learn how to respond. As 2 zesponse to chis more Inowledgeable, demanding customer, four shapers of roday's—and comorow's organizations have emerged Organization Shapers The four organization shapers ate the following 1. Buyer power 1. Variery Change +. Speed Buyer Power The new competition shifts power to che buyers, who know they are raining power end leeming how to use i. As 2 ¢ being designed aroun are beinglaunctiod t please the customer, and as resul they too shape Variety ‘One resporise to buyer power is co increase the number of prod ucts and services offered and to customize them. In order to know mort about customers. more and finer segments are created, The resule ia greater vanery and customization af offerings. To con: rend wich this, management: must know and understand more issues. Hence, it must colect more information. make more deci- sions, and set more prionivees. As a result, manageme! more people inco the decision proce: means to do this, suse bring sas, Decencralication is the Change But no svoner is 2 dec! ron made an the sicuacion changes, reguinne thar management releam and redecide. The combination of vanety and change causes the company co make sill more deci- nuns, more r2yvently. needs to expand cs deession-making eapactes. This capaci ss again expanded bv including more people chraugh decenceaiizacion Speed Customers nor ont. wane vaniery buc also wan ic faster in respond ing more quickiv to customer requests, companies discover chat thev can benefic from additional efficiencies. With shorter lead times and evele mes. a company rnvests less «a inventory and rams more quickl.: Wich chese clear benefits co all paris, speed ts che name of the game today. Speed also means that decisions must be moved to points of direct contact wich the work. Thus speed 100 isa force for decentralization oti diss. ‘Today's organizations must be responsive and flexible, TO QQOS dssary business strategies require state-of hhe-art organizations. But fcult to create state-of-che-arc organisations. Like difficult issues, such decisions land on the dese of (or find chew wav che evmail of) che chief executive. Chief execunves, like not, are being forced to become involved in crgantzetional design, fist 10 create knowledge-based organizations and second co create effeccive, rapid responses to powerful customers. 8 Information Technology . Management can get some help in coping with variery, change, and speed by emploving the new information technology, Although vartecs, change, and speed require that more decisions bbe made more often and mare quickly, information cechnoiogy can enable organizations to du just that. Today's « € people and databases together: che company’s entire knowledge dase and computer power can be delivered anv persan oo the fring fine chaciogy can ream Organizational Design and Executive Leadership Ongantzational design decisions are landing on the chief execuave’s desk because they are dificult, proriey issues. And che chief exec uunives are getting involved because they see che decisions as high leverage, and they see effective organizational design as a source of competitive advantage Organizational design decisions affect significantly the exece utive's unit. By choosing who decides and by designing the processes influencing how things are decided, the executive shapes every decision made in the unic. The leader becomes less of a dec- son maker and more of a decision shaper. Organizational design decisions are the shapers of che organization's decision-making process4 DESIGWING ORGANIZATIONS Unique Organizational Design Organizational designs that facilitate vanery, change, and speed are sources of compeciee advantage. These designs are difficult 10 exe- ccuce and copr because they are intricate blends of many different design policies. Thus, they ave likely 20 be sustainable sources of advantage ‘A good exemple of compecicive organisation design is the 3M ‘Company. Ir has maincamed an enviable record of entrepreneur ship and new business development, even though © is one hundeed years old. Many oursiders have visiced and observed 3M in action, ‘but few have been able to duplicate its ability to create innovative new products. Thes can cop particule: practices—for example, people at 3M spend 15 percent of their time on projects of their ‘own choosing. Bus what makes the company's advancage sustain, able 8 uftgue blend of praccices, values, auconomous structures. funding processes, rewards, and selection and development ot prod- uct champions (Galbraith, 1982). Thar isLiffcult to copys ts a compentive aeant for 3M. Chapeer Tw of ch the framework for designing such intrie: policies, volume furs cur tends of organizational Balanced Perspective The business world has changed, The ssiutioas to man of coday’s issues have cheir roots in new organizational designs This new pes rity of organsring ir easy co notice. It has been featured in cover articles in che business press, which has maoduced us to the “hor- icencal organisation,” the "virtual corporation,” the “modular orga- 10n.” and so on, All oF this coverage indicates the new Pron as well as an excepcenal amount of “hype.” The bype 1 oversellin: le, it a some credible ideas at such concepts 25 solutions rather than tools FOUR IMMUTABLE FERN) A curcumstances. Or the hype may desensitize people from ever lis- tening co proposals for new organuzation practices wich potential. 1 would like ro cake a more balanced approach, weighing the post- tives and negatives of current organizational design alzernatives. { see che choice of organuzation as a design issue. The design of organizations 1s much like the design of other things-—butldings airplanes, compucers. For example. everyone wants a lightweight lapzop compucer that is fast and doesn’t cost muuch, and thar has a large, clear, calor screen, lots of memory, 9 long battery life, and so on, Unformnacely, 2 computer cannot be designed thet meets all of these criteria simultaneously. Trade-offs must be made. The com- ‘puter designer must know which eritevta are most important. By the some reasoning we cannot design simple organisations thar provide 2 varievy of products to a variesy of customers on short evcle rimes and also capture economies af scale co provide low cost. Again. trade-offs must be made, The business strategy should ser the crite ra necessery for devermining the pnoricy cask ro accomplish. An organization can then be designed co meet those criteria. AS 2 result, the o*ganizadon is good at exerting sue acti ites good ac others. The leader's task 1 to help the organization choose. “This choice is the rade-off decision. “Thus, any organizational design has positives and negatives involved in every choice. The hype usually glosses over the nega- ves. Leaders who understand cher organizations can arucutace the negatives as well asthe positives of their organccations. Ths under- standing is imporeanc nor only for choosing the appropriate orga- nization but also for posttioning the leader the feader witl have to manage. This book attempts co present a balanced approach t0 orga- autatfonal design and to describe the positives and negatives of various desiga choices, However, the choice of orgenizet‘onal design will ultmace he 1 negatives are what depend on the business ion is 20 exi ical Bala bide ei alae PART ONE: A Framework for Organizational Design 00005Choosing an Effective Design ‘The traumewark for organizational design is che foundation on srhuch a company bases its design choices. The tramework consists. ofa sens of desuem policies that is controllable hy management and cn influence employee behavior. The policies sre the tools with The Star Model The organizational design framework portraved in Fipure 3. into egy, which de a The second! is structure, which determines the location of decision: making power. Processes have to do with the flow of informsution: they ace the means of responding to informacion technolopres. Rewardystems influence the motivation of people ro perform and dress organ win policies) iafluence and frequently define ermines dire: jena? goals. People policies resource ¢ employees’ mind: nis bo >cuses prim: id process policies 00Q06 appropriate combinazions of dEXGURE 2.1. The Star Model 2 business seraregy. The other design policies are vital and integral (o the whole organization and will be woven inco che discussion, when possible, but che reader io referred co vehee sources tor an ine depth analysis of them (for example, see Lawier, 1992).To provide a working familiaricy wich che five policy areas, general descrip- wsons follow. Strategy Strategy is che company’s formula for winning, The company’s srat- egy specifies the goals and objectives to be achieved as well as the values and missions to be pursued ic ses out the basic dizection of the company. The scracegy specifically delineates the products or services £0 be provided, the markets zo be served, and the value co be offered co the customer. Ic also specifies sources of competitive advancage and smves co provide superior value Traditionally, strategy is the frst component of the sear mode! to be addressed. It is important in the organizational design process because ir establishes d criteria for chewsing among alternative organizat form enables some activ- ities co bx performed well while hindering others. Choosing onga- ves inevitably involves making trade Strategy diceaes which activities are most necescary, chereby pro- vnding the basis for making che best trade-in the organizational design. tional forms. Bac nizational al Structure The structure of the organization decermmines the placement of + power and auchoney in the organization, Structure policies fall into four areas: + Specialization + Shape * Disenbucion of power + Deparsmencalization Specializasion refers to the type and numbers of ob specialties used in performung che work. Shape refers co che aumber of people consticuting the deparements (that is, the span of conmol} at each level of the seruccure. Large numbers of people in each depart men create flat organizational seructures with few levels. Dist- ution of power, in its vertical dimension. refers wo the classic issues of ceneralicatian or decentralization. In its lateral dimen. sion, it refers to che movement of power co che deparcmenc dealing directly with the issues exitical co its mission. Deparmen- «alization 1s the basis for forming departments at each level of the structure. The standard dimensions on which departmens ae formed are functions, products, work flow processes, markers, and geography. These five dimensions will be discussed in depth in Chapter Three 9000704 DESIGNING ORGANIZATIONS Processes Informacion and decision processes eut across the organization’ structure; ef structure is thought of as the anatomy of the organi. zation, processes are sts physiology or functioning, Management processes are barks vertical and horicontal ‘Vertical processes, a8 shown in Figure 2,2, allocate che scarce resources of furs and talent, Vertical processes are usually business planning and budpeang processes. The needs of different depart mens are cenwally collected, and peoricies are decided for che bud- geting and allocation of the rescurces #9 capital, research and development, training, and se Horizonta!—also known as laveral—processes, as shown 1n Figure 2.3. are designed sround che work flow —for example, nev produce developmen or the entry offal managing in today's greuni= UE ims range oF ways, fm voluntary conn als of the ganization. It provides motiva he-complerion nves with the goals of the tion end incenmive fo TSU 22. Ver i BE ibs boods CHOOSING AN EFFECTE DESIGN 15 FIGURE 2.3. Lateral Processes. The organizacion’s rewards system defines policies regulating solanes, promotions. bonuses, prof sharing, stock epcions, and so forth. A great deal of change is taking place it chis area, partice- larly 2b ic supports the laceral processes, Companies are now inmztce menting pay-for-skill salary practices, alone with team bonuses or gain-sbaning svstems (Lawler, 1990). There is alse the burgeoning practice of offering nonmonetary rewards such as recognition or challenging assvenments ‘The star model suggests that che rewards sytem ma cyent with the scoucture and processes ¢o influencé the strateric metion. Rewards sper effect mbinstion, with the ether de becon ewhen ey form a con. cho sistent package tr People This area governs the human resource policies of reerutt don, Totation, ttaliting, and devefoormenc. 'duman resource pallt- sie chee appropriate combinatiems—procluce che talent thet is sequited by the strategy and structure of the exganization, gerérat- ing the skills and mind-sews necessary to implement ts. chosen dire tion. Like the poticy choices in the other areas, these policies york best when consiscent with the other connecting desigm areas, Hut es also build the organi 1 resouut strategic direction. Fi1s DENONING ORGARIZATIONS Hlexible people, Cross. functional te people who are general ch other. Human resource ous peopte and organiza tional. capabi implications of the Star Model As che layout of the star model illustrates, szuccur® is only one facet of an organizacion's design. This fact is imporcane because most design efforts invest far coo much time drawing the organization chart and fat 100 litle on processes and rewards. Souccuc is usy ally overemphasized because it affects status and power, and itis mest likely co be reporced in the business press. However, in a fast- changing business environment, seructure is becoming less impor- rant, while processes, rewards, and peogle are becoming more amportanc Another insight @ he gained from the srar model is that differ- ene strategies lead to differenc organizations: Alchough this seems obvious, ie has camifications thar are often overlooked. There ws no “one suze fis all” organzational design char all companies—regsrd- Jess of their particular seracegy needs—shuid subseribe to. There wl always be 2 cumrenc design that has become “all the rage.” Buc no matcer the fashionable design—whecher i is che matrix design or the virrual corporation—crendiness is not sufficiens reason to adopt an organizational design. All designs heve meric but noc for all companies in all circumstances. The design—or combination of designs—that should be chosen is chat one char best meess che criteria derived from the scrategy. ‘A third implication of the star model is in the interweaving nature of the lines zhac form che star shape. For an organization to be effective. all the policies must be aligned, inceracring harmo- iously with one other. An alignment ofall che policies will com- rmunicate a clear, consistent message co the company’s employees, “The star made! consists of policies that leaders can control and hat can affect employee behavios, as suggested in Figure 2.4. ft FHOOSING AM SFFECTIE ESIGN 5 FuGuRE 24 Salle ang does Monvanen Information ~ a ' Behawwe yo Performance Caleore shows chat managers can influence performance and culrure bur only by acring chrough the design policies that affect behavior in the next chapter we will examine in greater decal one design policy—strucrure 00003Matching Strategy and Structure ‘Once che strategy 1 established, the structure of che ormant zation sets the framework tor the other organisational design deci- sions, The traditional hierarchical structure wi orzantzations—with its dysfunctional effects harsher criticism. Ar the same time, more and more structural sign alrematives have begue co appear. There is an appropriate away trom suthontarian management styles and the sepa- st ritles and privileges of 2 multileveled hierar under harsher and com: panies have fewer hierarchical (evels. Automation and information technology permit wider spans ce flarcer scructures {ewer hierarchical levels) The Dimensions of Structure Hisrarchies, albeit Razret ones, will sci! be around for some time. ‘They ate used xe reach decisc amber: of people in e timely fashion, They prewide a hasis for an ape’ ame being implemented much 1 sparingly and in conjunction with altemath ong bare process for conflict resol:Me FoR ane These policy areas, or dimensions, are + Shape + Distribution of power * Departmenralization These policy areas are nec listed in order of importance. Rathes, departmentalization—with ts far-reacking ramifications and atten dant complexities —is saved for last. Specialization Specialisation refers to the twpes and numbers of « used in performing the work. in general, the greater che number of specialties, she berter the subtask performance. But specialisation. also makes it difficule to integrate subrasks inzo che pertarmne she whole task. Today, the crend is toward less specializanion and move jot roration in low- to modenite-skiil asks in order zo allow speed and ease of coordination while in high-skill asks the trend is coward greater specialization in order to allow pursuit of in-depth knowledge. ‘The old nules of the division of labor were to break tasks into subtasks and have people specialize in small pieces of che work. For comptix tasks, the work could be divided so shat an ex; bring in-depth knowledge to bear on difficult issues. Electrical engi- neering work was broken into elecitomechanical and electronics segments. The electronics segment could be further divided, down % the role of circuir designer for digtal signal processing A differen logic applied to the subdivision of low-skill casks ‘Work was divided co create simple tasks so thar unedueated workers could perform them at low wages. Such workers were easy t0 find and little craining was needed. If rumover was high, new workers els il hi cei trae fo carars Suc at roductive at lice expense, sping countries. ountries, the old togie seit! appties zh-rechnotogy ‘work. Companies in electronics, genet- fea, and pharmaceuricals all search for experss in specialized fields to push the limits of technology. The Sevel of specialization is acru- ally increasing as new specialties are created every day. Special: ization of hugh-skill workers allows talented employees to gain greater expertise in their specific areas. The expertise can often be accumulated into darabases and delivered co che ceams by new anformation devices. These devices provide texc, graphics, phoros, and video so teach multiskilled workers. Thus, the expertise noc only serves its primary purpose af allowing the specfalist co gain in-depth knowiedge but alse can be disseminaced co educace and inform generalists. Jn conerase, at the lows and medium-skill levels, several forces are combining to eliminace ivgshly fragmented casks. Simpie iow- skill casks are being automated (machines car do che casis more cheapiy and retiably than peuple can} or export so devetoping councties. In addition, the costs of coordinating fragmenced, incerdependent tasks are too high in rapidly changing situations: a large amount of communication is needed to combine the work when hundreds of subrasis are involved. The remaining low- and moderate-skill work is being handled by multiskilled ceams of educated workers. These ceams are given end-to-end responsi- losses co make decisions for an entire piece of work, providing a more rapid and eHective work flow. “These new work arrangements offer che benefits of sreater speed and motivation and lower coordination costs (see Lawies, 1986). could be found and made 9 applies tn deve in devel complex, hi is think. Shape Shape is devermined by the number of people forming deparments at each hierarchical level. The more people per deparrment, the fewer che levels. ‘The number of people in adeparment is usually 00011referred to as the span of control—or span of supervision—of the department manager. The trend today is ro wider spans and flatter structures, 26 shown in Figure 3.1. As we move away ftom command and con- trol soles of leadershup, managers can lead larger aumbers. Thus she hierarchy becomes flacter. Fewer people are needed ¢o super- vise others. The flatter hierarchies lead to faster decisions, leaders ‘who are in touch with organacional members, and lower everhead costs. Buc what is the best rummber in order for leaders co ke able to provide help and training and make judgments about the work? The Conference Board, a group chat conducts research on orga nizational smuccvres, recently conducted a survey of spans of super vision among 1ts members. Wich thousands of observations from work groups, the distribution ranged from 0 ro 127 people. The dis ‘nbution was crimodal, with modes at 7, 17, and 75. (The mode— as distinguished from mean and median as descriptors of central fendencywis che value that occurs most frequent In this case, ‘three numbers frequently occurred: hence, there was @ wimedal dss tribution.) How cout ‘The craditional organizational model rypically used spans of about seven people (and. apparently, a number of companies sll do). icate with subordinates and evaluate them, man- agers had the time for only about seven people. The traditional span can be increased or decreased based on several faczors FIGURE 3.1, Tren + The leader and group members are all experienced (so less communication and coaching are needed) + Employees all do the same work. + Each emplovee’s task is independent o! ‘ne others. + The task is easily measured, Thus, groups of salespeople may inclu fiteer 1s :wenry people while software design groups may consis of only five Delegation of work by the leader to the group alse results in, wider spans. Indeed, some exganizations widen spans to encourage more delegation. Some organizations coday monitor spans in org rizational units and set goals to widen them progressively. Thev train their managers to aslope mare af a coaching style an¢ less of a controlling style. So spans of about seventeen are very possible A different kind of organization is needed for spans of sevency- five people. An example is s factory wich a plane manager and sevenry-five blue-collar workers. The workers are organized into three reams of pwencv-tive people, with a team for each of che three shifts. Each ceam is selt- managing. |e selects, trans, disciplines, and ress al is oven member. The teams schedule the work and pro- pose Capital investments. The plant manager advises the ceamns and speals most time communicating with people outside the plant Thus, the more che managerial work is delegated to work reams, the less the need foe direcc supervision. These kinds of teams lead to the elumination of tevels of supervision and the complece elimins- tuon of command and control styles, in Suit, if & quite possible to observe companies following the management model, choosing spans of about seven, szation and goal setting can less to spans of around seven + companies with policies of elf-managtng teams, spans of important to follow all the 1992), these reams (see Law ation with the purpose o0012his is because spans are more © eliminare levels, The ent departments: the first 2 chiminate in one function, the third level easiest in anccher. Span analvtis would lead co a reduction of levels and would accoune for differences among departments. So when reducing levels, an approach chac widens spans is eases to imple. ‘ment than one that focuses on levels. Distribution of Power Disribucion of power in an organisation refers t0 nwo concepts, The first is che vertical distribution of decision-making power and ~ authority This is called centralization or decentralization. Today, the end is largely toward decentralizion of decision-mucing power, pushing the power down 9 people with contact. ‘The second concepts the horzonrsl distnbution of power. The leader needs ta shift power to the department dealing with tssion. critical issues. Today in many compeciive induseres, the power to influence prices, terms, and conditions is shifting to che know), edgeable customer So inside the organcation, che decision-making Power is shifting to units with direct customer contact. In industnes where contracting out has raised purchased goods and services co 80 percent of cos: of goods sold, the purchasing function is being siven increased decision-maiang power. A task of the leader is to ‘weigh continuously che business situation and tilt the balance of power when change is required. direce product or customer Departmentalization ‘The activities of organizations involving more than ewo dozen People are grouped cogerher to form departmencs. Deparrmeatal- ization refers to the choice of departments to integrare the spe- cialized work and form a hierarchy of departments. The choice of WA GST ram es type of department ts made at each hierarchical fevel. Deparamencs are usually formed to melude people working in, one of the follow. ing areas: 1. A function ot speciatty 2. A product line 3. A customer segment 4. A geographical area 5. A wotk flow process Each department type is appropriate for cereain situations. The serategy and the size of the organization determines the choice. Functional Seructures. Most companies scart by onganizing around activities af functions. Companies of modest size usually adope the functional structure shown in Figure 5.2. The diagram, shows 2 cypical Hewlere-Packard division. The functional organization provides several advantages. First, gathering cogether all workers of one type—the R&D people, for example—allows them to cansfer ideas, knowledge, and conracts among one othes, Second, it allows chem co achieve a greater level ‘of specialization. When two hundred or so engineers are pooled, they can afford co dedicate some to such specialties as circust designers FIGURE 3.2. Functional Organization Structure, ‘Gere anager Tomes} [ek] Les | TT rD> DESIGKING ORGANIZATIONS for gallium arsenide semiconductors, Third, using the example of a single purchasing function in operation’, pooling the workers allows che company to present 2 single face to vendors and exercise buy- ing leverage. Fourth, taking the exempit of using one manufacture ing function to perform all production work, the company can afford to buy an expensive piece of rest cauipment and share it across product lines. Thus, the functional structure permits more scale and specialisn panies of» cereain ¢ Orgenisacions with functional departments also promote stan- dardization and reduce duplication. An activicy that is organized ‘unctionaliv is performed in the same way and (presumably) in the best way chrouthout che company. The functions scope one system fr one policy for everyone rather than have each deparment invent its own, The functions adore a single computer system. inventory contol policy, uhsenteeise policy, and 90.00. Companies often revert back to the functional structure co and duplication of sestemns, ata independent untts not shariny ne conpernt ‘The junctional organisinon has two weaknesses that trequentie dead to the mn of atten we structures. Th apparent fa company offers a variety ck and ion than other structural alrematives for cam- liferation, result from products. services, chat strated in Figure 3.3. Apple gantcation 10 great advancage produced only Macintosh computers and sold chem naouel computer deale ts. However the produc sstomers. The: situation, rer used the functional line expanded co Is expanded to frchude direes sabes, direct markevng, and mass mer- chandisers, 5 wel. as comauner Geaiees, This king of varieey over- ptops, and palmtops, aad the zales ch ov of az general manager and The functional organisation is best at managin li a_i lh i i q MATCHING STRATEGY AND STRUCTURE €7 FIGURE 3.3. Apple Before anc “ver Beorgamation Desens — SS —_:——— Mass ‘Mae sae | Desi resales, Betore Afr either changed by orgamssing departments around products and matkets or enhanced by the lateral processes. (The farter are eseribed on Chapters Fourand Five.) The other weakness of he functional structure is che barrier created becween different functions, inhsbieing eross-funetions provesses such as new groducr development. When & comnans Ns iy une product line (that dues wot duange often) aond whven tong sroduct development cycles are feasible. the Fenetional organiza jonal processes Ind simultaneously Baur nas custom product development times over- ng. sructures and by lateral non can manage the cross" deliver scale, expertise, anid product life cycles, and rapt evel ‘ehelm the functional seuctare. Thus today chis scructure is be replaced by product. market. or pra crossefunctignal processes. ‘Thus, the functional orgsa ization fs appropriate for small com- panies and for those thar need proprietary expersse eb & appropriate if product and market variery i small, and if prodvet life and development cycles are long: It is dex ning in popularity secause in many industies, seed i more imporcant than scale, and responsiveness to variety ndition for sur’ Gon, short Product Structteres. Th re. Whe Functional by a produPb DESIGNING SasaniZATIONE and tho: eve minimum efficient scale for zh reates multiple fanc: Hons, each with its own product tine (see Figure 3 Hewierr dividing divi manufacturing, the comp: anal o panufacturing, the compan janal organiza ted, Bach division focused on a singie product line and new product deve!- opment. Forming departments or divisions around product is the best way co compress che product development cyele. So product structures became the standard method for managing serategies of product diversineation and new produce development. To create 2 ‘new product, management created a new division. Buc product seructures have their own weaknesses. Product gen: ral managers ait wane auconomy. Each product division then sein vents the wheel, duplicacing resources and generally missing opportunicies for sharing. These features are the strengths of sa functional structure. Therefore, companies uswaily augment che product scructures with lateral functional processes, as we wii see wn Chapters Four and Five Another weakness of produce srructures is the possible ioss economies of seale. Not all functions cen be divided ino product units without a scale foss. These functions are often kept cenaralized FAGURE 3.4. Preduet Struceure, — (Tee) ut Finance |-— Haman maouren Eleccrome RED Operauons Mesoone sakes 68 we angele el eA alle nd shared. This situstion creates hybrid structures that are mostly product but have a central shared function. Ax Boeing's commercial aircraft group, the design and m: ure of planes ts divided into product tines ef narrow bodies and wide bodies (747, 767, and eventually che 777). However, tbe fabrication of major structural components requires very large and expensive computer-connolled machine cools. These would be soo expensive to duplicate in each produet line. Instead, a cenral fabrication unit is created and all manufacturing activites requir ang scale and skill are placed in 1c and shaced across product lines. ‘The smucture, shown in Figure 3.5. 8 hybnd of produets and func- tions. A similar situation can occur with zhe purchasing function. Today many companies are contracting our thei component manu- faccunng,. Purchased material can become as much as 80 percenc of the cost of goods sold. A centra: purchasing or procurement fune- sion can become a ceneral shared function ‘The biggest challenge to the product structure comes from cus- tomers who buy fom more than ene product division. In the past, oF coed compering on time-to-market and fasr-delivery bases will find process organizacion far superior ro a functional seructure. io addicion, some cotts are reduced with a process organization. The fascer cime cycles mean reduced invencories and saster zecerpe of cash. The reduced working capical translaces into reduced costs of carrying inventory and cash. Other costs are reduced because duplication of work across functions is eliminared. Wich a func- tonal structure, often one division will not crust che input of another and will check and cework information £0 1s own satisfac- ion, A process organization eltminaces such redundane activities, verifyeng input once for ail functions. The process organisation is therefore superior co the functional corgantzation in businesses with shore product life and development cevcles. [tis aiso superior when che redesign ot processes nas great pocenial for reducing costs and sausiving che customer. [n contrast, the functional orgamation is superior for companies with tong cycles and where scale and experuise are important. Yer the bene~ fits of a process orientation can still be obtained by creating laceral process teams, which coordinate across the functional structure. ‘When compared with che functionat organization, che process ‘owganization can break down bamers and achieve significant sav- ings. However, the structure should be adopted with care. Its cur- rently fashionable, which means the weaknesses associaced wich it get suppressed. When compared wich product or marker segment steuccures, it 1s not yet clear how the process structure stacks up. Product and marker structures have themselves knocked down functional barviers and achieved end-to-end focus on products and customers. And the process scructure creates its av barriers—for zxample, a handoff between the new producr process group and the vit can be held accountable, fe-rnme reduction. by doing a cing work across functions. Thus, companies MA GST AN eo arder fulfillmenc process grout asa product moves fom new to i 1 prodixc: organization would be seam less on this sue, ntrast, hi woskecrivicy enhancer, ics probable that product, market, or geographical divisions will be the basic profic cencers, The subunits wichin chese profc centers will be divided ato functions or processes that are useful within product or customer structures. Uliumately, combining « process foc oduct or gar eet smsciure should prove to be a powerful “Choosing Structures “The leader’ firse organicactonal design choice is the hasie soucture This choice process bogens with an understanding ot the business's strategy. By matching what is required by the strategy z0 shat is done dest by the various structures, a deesston can be mide, The lund of strategies execuced best by che asic seructures ate Fisted as follows: teional Seruccure + Smalls . single-product line + Unditferenniated marker * Scale or expertise wichin che function + Lang produce developmenc and life cycles * Common standards Product Seuceuve * Product focus + Muluple products for separate customers + Short produet development and life cycle + Minimum efficient scale for functions or outsourcing 000193b _DESIGHENG ORGANIZATIONS. Marker Scructure + Importance marker segments + Product or service unique to segment + Buyer strength + Customer knowledge advantage + Rapid customer service and product eveles * Minimum efficient scale m functions of oussourcing Geographical Sucre + Low value-covcransport cost ratio + Service delivery on-site * Closeness to customer for delivery or support + Percepcion of the organtcacion as focal + Geographical marker segments needed Process Smucture + Bese seen as an alternative co the functional sericrure + Potential for new processes and radical change to processes + Reduced working capital + Need for reducing process cycle times ‘Unforunatel, 10 the typical ssruation no one type of structure best fits the business scracegy. The decision maker should list che strengths and weaknesses of each seructural altemative. The deci- sion maker must also develop ponies for strategic actibutes, sich as cycle-time reduction or scale of manufacuring, Then the choice of steucrure can be made for the cop pruorcies. The structural alter- ves that are run of lateral coordi up become candidates for hyb processes. MATCHING STRATEGY AND STRUCTURE 37 injerarchy is losing favor, faster hierarchies will be with us for some time. The functional, product, market, geographical, and process alternatives were all analyzed aad their strengths and weaknesses identified. For some structures, the weaknesses can be overcome wich hybrid structures. For others, lateral processes can augment the basic scructures. Indeed, zo be responsive on mulkiple dimen- sons, lareral processes are key. These processes will be discussed in the next ewo chapters 00020Linking, Processes to Coordination Needs Msc of che acomiey in an organization does not follow che vertical hierarchical serscrure. As continuous change becomes the natural scare in most industries, laceral processes become the prin- cipal means of coordinating activites. Lateral processes are iniomation and Uecision processes thac coordinate activities spread out across differene organizational units. Laceral processes are mechanisms for decencralizing general nanagement decinons. They accomplish the decentralization by recreating the organization in microcosm for che issue ar hand ‘That is, each department wich informacion about—and a scake in—an issue contributes a represencacive for issue reselucion, as shown in Figure 4.1. No matter what type of hierarchical structure is chosen, some activities will equire coordination across departments. Most orga- nizations deal with a complex world. They bave todo business wich snuleiple customers, multiple partners, multiple suppliers. They have to compere with rivals in many areas of the world. They deal wich governments, regulators, distributors, labor unions, and rade associations. They employ differenc skill specialdis. using multiple technologies while producing a variecy of products and services. If 2 company creates an organization to maxtmite its effectiveness in 0002142 DESIGNING ORGANIZATIONS FIGURE 4.1, Lateral Procestes Across Deparrments Souace: Galbraith, 1994,p. 6 dealing wich one constivvency—for example, customers—it fi mens its ability to deal with ohers—for example, unions. All che dimensions not handled by the structure regvite coordination through laceral managemenc processes. “Today, these other dimensions are increasitig in number and importance. in addition to focusing om more poweriul and knowl- edgeable austomers. 1 compare es Pas Suving power, concencrste its R&D invesements on ies feading t core comperencies, andl become a active host governm: ‘bnotogies and bod citizen in Tez ts negotiate relationships. Companies mist focus simultnneously on governments. customers, hinetions. ven: dors, and products. Laverel processes are designed to provide che company with the capabitity of addressing all of these concems, “Today « company must creace a multisimenstonal organization file around its basic structure, A company must be flexible in address ing whatever unpredictable issue anes, whether it pre oF an opportunity Lateral Coordination LUNKING PROCESSES TO COORDINATION NEEDS «3 single business, funecional structure, and its cross-functional laceral processes. (The funcnonal scructure is the most common crganua- tional structure. For more on this, see Chapter Theve of this vol- ume, For a discussion of iateral processes across subsidiaries and business units, see Galbraith, 1994.) The management challenge for a functional organization 1s coordinate the cross-functional work flows, as indicated in Figure 4.2. Coordination across functions—to create and deliver products ce weovees—is the responsibility of the general manager and his or her management team. As mentioned in Chapter Three, this coor dination is most easily accomplished when the company produces 4 single line of praducts or services for 2 single customer type, and when produc: life and development eycles are long But the need for lateral coordination will exceed the capacicy of the ceam at the top when a company’s stracegies and tasks sovolve the following * Diversey + Rapid change * Interdependence of units FIGURE 4.2 Worl. Flows Across Funcrional Seructure. ‘Seaver ounce a Se“pe a mars © A process focus * Speed To deal with these forces nagement may § 1. But another altemative is to enlist lateral processes, which may be thought of as “general man- ager equivalents.” These processes offer a different, more subtle approach co decencralizing decisions and increasing decision- making capacity, The tyzes and amounts of lateral processes used will vary depending on che relative importance of the five forces. we to-change the ucture of an organ Diversity ‘The more variery in 3 company's work, the more decencralization ss needed, No functional managermencream can handle th ity setting required by multiple pradwecs in rmulciplie markets. For example, Apple has evolved from a company offering single proce uct sold through dealers in the Unite States io one offering many products sold throurh muleiple channels domestically as well as in Europe, Asia, and Latin America. Rapid Change Rapid change—when combined with diversicy—overwhelms 2 functional managemenc tears. Management must make and temake decisions as situations change and new circumstances arise. Communication abour new events is required. The organization managing a product with a rapid life cycle, like rap music, will be more decentralized chan the organization managing one with a long life cycle, like classical recordings Interdependence of Units Execution of incerdependent tasks requires communication among, the task performers. Boeing’s 777 project has 250 teams perform ing the wack; an investment bank also has 250 teams performing tts work,, Boeing's teams are design-and-build reams for sections of the cockpit, avionics. These ceams are aghtly integrated and communicate frequently. In cot separate deals for separate. clients. Each team can act independently because its work will nowaffec These teams ate less interdependent, They require less coordination chan the Boeing reams do, A Process Focus Process-facused efforts, like cocal qualiey management and -stengineering, examine work flows across functions and aim a¢ concinuously improving processes. A process focus leads co more cross-functional coorchnacion and inevitably to lateral manage- ment processes Speed Finally, cxcle-time reduction demands for new products, customer orders, and customer service requests subscantially increase the need for ctoss-funetionat coordiaation. To accomplish these reductions, decisions must be moved co the points of product and cuscomer contact; there simply is no ime wo go up the hierarchy to find a ger- eral manager. Laceral processes create a general manager equivalent av the point of action ‘Thus, collectively chese five forces decermine the need for cross-functional coordination and the correlating ‘amount of cross- functional laterat processes. Ic is important co recognize that the need varies, from low (for companies manufacturing beer or producing classical music ciles, for example) co high (for shose producing multimedia produces and cap music cides) The Benefits and Costs of Lateral Processes As noted, the task of the organization designer is co match the type and amount of lateral processes wich the cross-functional 900234b OESIGNING ORGANIZATIONS coordination required by the firm's business scrategy, The designer ‘must avoid choosing t09 litle or too many lateral processes. Up co. point, laceral processes produce benefits; thereafter, chey increase costs and difficulty, ‘What are the benefts of faterel processes! The benefits involve permitting the company ro make more decisions, different kinds of decisions, and berter and faster decisions. Because lateral processes decenralize general management deci sions, they free up top management for other decisions. Thus they increase che capacicy of the organization to make more decisions more often. The organization's therefore more adaprable to con- stant change. Dierent gypes of decisions are made and can address the mulople dimenstans of a business envizonmenc. Companies Gecentralice choice to the points of produes and customer contact where decisions can be made and imlemensed quickly because these groups mov have aceess to current and joes! ingermasion avail able only 1 chem. A business may have nctional structure hut, b enlisting lat eral processes, 1t becomes capstle oF forming new product reams, customer reams, and process teams for reent as cherefore Slexible, ng matcer che sss ing, The business However, laerai processes can also create costs. The decen- rraltzed decisions may nox be better chan hose of top management The people may not have the pesspect.ve and expertence oF cop management. These costs can be mantmuzed, however, by maxing the organizacion’s coral data base available, by trainin people, and prov ing the correct incentives Another cost comes in che form of the cime of the people iswolved. With coda’: at and lean hierarchical seuctures, emplovee tame is ata premium. Time spent on pent wich eustamers or devele = ian li UNKING PROCESSES TO COORDINATION NEEDS 47 differently, Much of the cime involved in crose-funetional processes is devored co communicating, problem solving, and resolving conflicts. The company chat is skilled ar confer resolu- tion can lower che costs and time needed co reach decisions. “Thus, chere are both benetiss and costs to lateral processes. The designer needs to find the point of balance. This balance can be crock by matching coordination needs with the different types and amounts of laceral processes The Three Types of Lateral Processes There are three basic cypes of lateral processes, as shown in Figure 4.3, They vary in che amouns of management time and energy chat must be invested in them. Informal ot voluntary lateral processes occur spontaneously They ate the least expensive and easiest form ro use. Alchoush they ccecur naturally, organization designers can greacly improve the fe quency and effectiveness of these voluntary processes. The next type ot lateral process. whch requires more time cum smigment, 1s fortnal groups, Teams or task forces are formally creaced FIiouRE 4.3. Types of Lateral Processes. Management time and diffe ow Uoiormal, voluneary orgamistion * Monin + Excensnve 00024AE DESIGNING ORGANEATIONE Jefined, ang gael, se; for the ros ‘OUDS HE TH d luntary groups because they are “e treation of >ecur natural for proper funcuoming Formal groups are also more costly because chey ate used in addinon ro the voluncary groups, aot inscead of them. The organi avon needs boch voluntary efforts and forma grps to supplemenc the general manager's coordination across func’.ons, The simpler fomns ave sul needed but are insufficient by enemselves co achieve the incegracon the stracexy requires The third level of commutment 10 iaterai processes comes with appointment of integrators cc iead che rormal groups. At some pomt, folleume teases: mov be required. Leader: may be aracluts managers, projec: managers. process managers, brand menagers. and soon Thev are ali "irle general managers," who manage 2 product or ser- vice in place or the genera! manger, Thev are enlisted because there are many products. new products. and rapid ine cvcles Using integrators is che most cosch jatzrai process. in addinion functional 13, companies are focust ally and be nr she renen to generace a plan an managemenc co delegate decision making to tt. The team is mea sured on total proficabilicy over the product’ life evele, making i jeasier co reward the members for the team’s performance. Complex Group Structures “Teams can become comples for ewo reasons. The firses the siz of che reams. As companies focus on work flows and attempt to put decision-making audrority at poinas of contact with the work ieself, the number of deparmments involved can tise. Acsome point, its necestary to divide the overall process into subprocesses. The sub- processes are semiauconomous, with cross-functional reams of went; co cwenty-five people raking responsibility for each of them. “These subdivisions create a design problem: trying wo link the sub- processes for overall coordination of tine work flow. The desizn the linkages leads :9 complex lateral geoups. 0003162 ' DESIGNING ORGANIZATIONS Teams also become complex when the business has muluple dimensions. Although the Boeing 777 design-and-build ceams are created around sections of the product, Boeing also forms cus- tomer ceams for customers like United Airlines or All Nippon Airways. The diffculey arises because the design-and-build ceams want every plane (o be che same in order 10 reduce costs and cycle ‘ume while che customer zeams wane the planes to be different for each customer. Hence, there is a need for dialogue and conflict resolution. Thus. complex structures become necessary when, ceams are interdependent and possibly in conflict. With complex team seructures, the organization designer must solve two prob- lems. Firse, che designer must cveate processes co coordinate and communicate across teams. Second, the designer must create a process a resolve interteam conflicts. Two examples will serve to ‘Muscrate chese concepes Work Flow Process Team. Computer companies have complex otder fulfilimene processes, with a large number of departments working en ¢ customer's order from wsuance to delivers These com. panies create subprocesses—such as order entry, inbound logistics and outbound logistis—co form the entre process. The order entry portion processes the cusromer’s order, which may invobve several products and sofware from outside vendors. There are ered checks and pricing decisions. Often, there are custom design features involving engineering, Inbouné logistics takes the customer onders and places orders on vendors. This team manages the receio: of matenal, accounes payable, caw maverial, and some in-process inventory, up (0 final assembly. The outbound logistics team man- ages assembly, delivery, and instailacion of the system ar the cus- comer site, it manages finished goods inventory, billing, and accounts recewable. There is a team for each subprocess. Each team. has «work floss reds éeciaions made by one team wrth those made by othe iscretion anage its poruan of ¢ it, and contir improve i CREATING AND INTEGRATING G20UF OCESSES 63, Fours 5.1. Teams to Manage Order Falfliment Prodeer fo SRO Vendor angen chree members play liasson roles and participace in pairs of ceams The shaded areas shows the engineers: manufacturing engineers, and purchasing managers who camy out the linking soles across teams. (The teams ace linked, and form @ hierarchy of reams—as opposed toa hierarchy of roles in a simple structure—0 resolve conflies.) A leadership team 1s formed by the leaders of each team and an over all process leader (This leader is an incegrator; this role will be dis ceussed in the next section of the chapter.) The leadership team sets decision criceria, communicates across teams, and quickly resolvesnage marker for new products, New produess, \ used to take nyo tg three years to develop, are now created none year, and tase ab bases of comperition, out e nia aths, Speed is ane of the This business has also become cost-driven, and many compo- nenes are contracted out 10 low-cost producers. Bur component costs are Volume-driven, Thus, seach product ceam chooses che same cormponene and the same vendor, che volume from che bust aiess can be concencraced on a single vendor, and lower costs obwained. In order vo agree on a commsn cormpenent and vendor for each component on each product, the company created come ponent ceams for keyboards, cathode cay cubes, printed clreutt koards, and several other Po The issue to be managed in this example 13 rhe potential von thes between the component "zims and the product reams. Con- diets can surface in two ways, Fist, the product design engineers usually prefer components rhac opcimize the pertormance of chet product, But common componenss mean chat a component will Ke all produces and optimize none of them. So the design engineess may fighc the idea of using common components at all or chev may disagree abouc which component should be the commen one. The cocker point of cone: may involve che attempt co reach consensus across the product and component ceams: chis process can constain che speed of the product design ceam. Top speed ‘s attained when each team makes design decisions independently. The design of che seam seructure and che guidance from zop managermenc axe the keys w achieving simultaneously common components and speedy launch of new products Top managemenc of the compucer company has articulaced a srategy that places cost as the primary cricerion for resolving con: Aicts. The strategy shifts the burden of proof «o the engineers co show how a unique component will result in a substantial price and performance difference. Management also challenges the MGA TECK EGR WE ag gineers ta achieve high p ommon components, Top ce formar ¢ while using standard, agement’s strategy is tO provide decisions to product and component xia setve the dispute set for decentrall across rhe reams, The organtzacional design of the product ams and component ceams is shown in Figure 3.2. Each produce ceam is a cross- functional unit led by a produce manager from engineering. Engi- neering and purchasing representatives working on grinted circuie boards and eeyoards are members of both the product teams and che component teams. They serve as che links becween che wo ent process + reams. They are joined on the component teams by their counter- parts working on ather eroducr reams. Component ceams are chaired by technically crained managers from purchasing. [a num, che component ceam leadess, produce ceam leaders, and product iranagers all form 9 conflict resolurior eam. chaived by the pur chasing, vice president, A manager from engineenag, usually a com- puter archivect, participates as well, FIGURE 5.2. Product and Componenc Team Combination. +> Terminals |188, DESIGNING ORGANIZATIONS The key features of the design are che linkages. The engineer- ing and purchasing representatives who parncipate on both teams are central to the coordination and communication berween the teams. The other links are che people who serve as leaders of the two teams, Collectively, they constitute the conflict resolution team. They link the team efforts with @ thorough but rapid appeal process In this example, che teams permic a functional organization to focus simultaneously on products and on component vendors, With, purchased components accounting for 70 percent to 80 percent of cost of goods sold. and with product speed and cost central to che customer purchase decision, the business chooses to manage new products wich the complex ream struceure. Each product requires 2 general manager and each component requires 2 general manager. ‘The intention 1 to generace rapidly 2 family of new, low-cost prod- ucts. The speed of the product ceams is constrained by the use ot ‘common components. Bur the more etfective the participants are ax communicating, shating databases faster chev can senerate nev a 6 resolving confliess, the pw-clist products: The ability te execute «| multidimensional decision przess becomes a compere tive advantage tn the marketplace Thus. the ormanizational desige of teams can vary from simple tocomplen. The easiesc design to manage isa semes of simple teams, ‘cach with end-to-end responsibility for its cask. Because each team controls 1s own destiny, che most freedom can he granted anid the best speed in execution obtained, The reams ec more complicated when the nuinber of participants becomes too large for a single team to execute end-to-end responsibility: Teams are also more ‘complicated when 2 business wants to be responsive with produecs but muse simultaneously respond to vendors or customess. Size of ‘group and mules ronal Fésponsiveness both lead to the design of linkages acro aps and a hierarchical conflict-resglution dimensional ream process. The ‘eeute rapidly mm espansiventass and pe CREATING AND INTEGRATING GROUP PROCESSES 67 In these examples, team leaders were putin place without much explanation of the integrating role. The next section discusses the design decisions invalved in choosing the cype of integrator and integrating roles. These roles are adopred when the teams need a fall-ime—and often neutral~-leader. The ceams will requce leaders when coordination is challenging, dhe performance targets are dif- ficult, and the ceam efforts are high priory. Integrating Roles ‘The most complex aspect of the lateral process is the creation of full-ime leaders. Invegraring roles creave the culy muludimensionsl ‘organization. There isa need for these roles when a comaany wants to attain functional excellence, generate new products and services, and be responsive co customers. Such capacity isa requirement for some businesses in complex. changing world The flexibility to deal with customers, vendors, and processes ‘comes at 4 cost. First, there ts the abvious investment in salaries for Trecpie whe are ro coordinate the work of others, The investment, however, should vield faster time to marker of becter customer Knowledge and relanonships. The second cost ws the cime spe: resolving coniliees. Managers for customer segments, products, and functions all see che world differendly. Disagreement and che nabil- icy p resolve ic eeesively can slow the comsanv responses and rum the focus isard rather than on customers In contrast, che abilicy ro deal with controversy and differenc ‘views increases the company’s ability to respond co a variety of opportunities and threats. This ability sa competitive advantage Design of Integrating Roles Theorranicarinal desiem iss the powet base from which the intagratac will Manages in resources, bur. what isower and inluence bes the i the incegracor will be shaped by cegrator need? The power base of che following factors: Structure of the role « Stating choice + Status of the role *# [nformacion systems * Planning processes + Reward svscems + Budger authoney * Dual authoney Structure of the Role. The ideal seructure is ro have the incegra- tor report directly co che general manager. The usual practices are shown in parts A. B, and C of Figure 3.3. Because there are usually severai product lines, product managers report co a product man- agement funetion, as shown in version A of the Sgure. The prod uct managemenc funecion may have some additional people working on costs and schedules of product programs. In a vasiacion of this practice, the product managers report to the R&D or engineering manager. Version B shows this mechod in high-technology iaduscries. Version C shows another variation, seen in consumer packaged goods industries, where products and brands have long lle cycles. Both versions B and C place che prod- uuct manager in a function chat is dominane for the industry. The variation in version A shows a more powerful, more neutral, and move general managerike structure, because ic is not associated with any function and has direct access to dhe general manages. The vari- ations are appropriace for businesses chat are cechnology-driven (version B) oF market-driven (version C). Other variations are ls0 possible (Galbraith, 1994, chap. 5). FIGURE 5.3, Produet Manager Vacations Version A. we | | crenmn| [totes | [re a eee] [Watecns enter Pre —_ —— — Version C Teneat a i 1 Pe prevonr ork wo] Open | Mowkcine ml cm og I os 00035PIUMng provest Tequuce: mformanon (0 support it. Ie yeeds participants skilled ac problem soiving in contlic situations. “ally ic requires a general manager sllled at managing the process und comforable with managing conilics. teward Systems. The step from che planning process to the ceward system is a nacural one. The managers on either side of the planning macrx have agreed on their goals. Ics unportant for each rranager co make che goais 1m all of hus or her cells in the macrix, sor just in the cocal of all the cells (eraditionally, the normal prac- ice). Then che monagers become jointly accountable and are xesponsible for the same goals. The information system, planning wocess, and reward system farm an incegrated package of manage ‘ent practices that suppor: the multidimensional organccacion. Budget Auchoriey. Another way to enhance the intezrator's role fo wive i conceal over the buduer for 1s product, process, at mar v2t- The veganieacion desianer specties whicls hale eszeyories ancl ymounes fe involved io onder #9 enance the integrator: execs on of hisor her cnaninarion cask. Dual Authority. The final step in creating » power base for the regrator isto give that person authority over the peaple w che function. This step creates a mazrns seructure that contains (wo yeparning lines, Usunlle one person i selecsed! ava subproyect man ager, as shown en Figure 5.4 “The subprojece manager alone works for twa bosses. The duat vathoriey is impiemenced by having both bosses participate i the goine setting of goals and joint performance assessment for che sub- project manager Only organszations ehat are slalled at lateral processes should aremgt the dual authoriny step. It createsa power balance berween he climensions of che srructure. In addition, dual authoriry can gen erate ts own ser of conficcs, The siuarion can easily generate mare disagreements and confusion #13 etic oll ae ne FIGURE 5.4. Matnx Sructere with Dual Auchoricy —— {General anager Seber Source: Galbraith, 1994, p, 100) ‘The formal laeral processes of groups and integrators are power- ful methods co use when management muse arstrong role m the ation. Through these pencesses « mulewlimensional cogamization is created, incended co increase the company’s flesi- hilery in eesponding co vendors, markers, cechnologies. govern- mens, and sv un. The orgar nod is more hiely to be capabie of extensive communication and cooperation. and rapid escalanon and resolution of consliers, The next chapcers presenc some addh- sional examples of combinations of structures and laceral processes. lateral 0 00036The Mete-Model of Planned Change {rev 6/05) Michael F. Broom, Ph.D. and Edith W. Seashore, M.A. This a model of managing change in human systems based on the classic perspective of ‘organizational development as developed by NTL institute for Applied Behavioral Science. That perspective holds that the tasks of an organization-from planning to production-are accomplished with the highest level of productivity through processes that are highlighted by a high quality of relationship among those responsible for those tasks. With that in mind, the Meta-Model of Change Management is offered. It is a model that believes in the empowerability of human systems and the people that live and work within them. Accordingly, the Meta-Model calls for collaborative strategies and factics aimed at open communication, and consensual decision-making. A model is a descriptive system of information, theories, inferences, and implications used to represent and support understanding of some phenomenon. Meta-, in the sense used here, is a context or framework. A meta-model could, then be understood as a framework or context of a madel-albeit, a model of a model. A meta-model of change management, then, is @ framework from ‘which any number of more specific models of how to manage change in human systems can be understood and developed, Our model is @ matrix with the vertical axis describing eight disciplines which, when each is consistently adhered to as disciplines, will support the success of any particular change management effort. The horizontal axis describes the five iterative stages of any change management project within which each of the disciplines must be applied. (A three dimensional model is attached as an appendix and offers four levels of human systems-personal, interpersonal, group, and organization/community-to which the two-dimensions must be applied.) Disciplines | Stages. | Data intervention | Evaluation” ; Disengagement Gathering | Contracting | Use of Self systems , , Orientation i ' "Sound and Current Data Feedback | Learn from I ' 1 Differences | Infinite Power! Empowerment Support ‘Systems The Stages of The Change Management Process These stages of contracting, data gathering, action, evaluation, and disengagement are not discrete. They overlap. They are iterative. They often must be orchestrated simultaneously. Each can trigger the need for another. Data gathering, change action, evaluation, and disengagement can all lead to re-contracting. Any stage can lead to any other stage. The order presented is generic as if all things were equal, which they never are in human systems. 4. Contracting Change management efforts are undertaken by people in any of several different :oles. This includes the person(s) with direct decision-making authority over a system or part of a system as well as someone working oF living within a system without direct decision-making authority Change management efforts can be undertaken by someone from outside a system called in for that purpose. Regardless of the role they may be in, we will call those who undertake change projects change agents or change leaders. Again, regardless of the role, change leaders must contract for change with the other members of the system, Contracting is the process of coming to agreement with those person or persons who are key to the Success of a change project. If the change agent is the person in decision-making authority, the agent must contract for change with those who live and work under that authority. If the change agent works or lives within the system without decision-making authority, that person must contract first with the person in authority for the desired change. Then, together, they can contract with the other key people in the system. In the same vein, a person from outside the system must first contract with the owner of the system, then, with the owner, contract with the other key persons. In the case of peer reviewers, contracting usually occurs with the director of the museum and/or the head of the governing authority before the on-site review takes piace. When organization-wide change is desired or when a local change will have organization-wide: impact, the change contract is best made at the highest level of management. Contracting at this level leverages the greatest accountability-rewards and penalties-for the desired change. Change ‘occurs most efficiently from the point in the system that will have the greatest impact for the least effort Effective change contracts specify at least three things: a. Change goals that are clear, internally consistent, and that have a systemic and human values orientation, The most effective change goals are fully consonant with the well-being of the system as a whole and its members. b, The roles of project leader (the client) and process facilitator (consultant). Its is important that project leader be the person who has primary responsibility for the system that is the target of the change goals. It is just as important that the project understand that his or her is just that-to lead- with the support of the process facilitator. The process facilitator (consultant) must have the skillsneeded to support the leader in effective use of the five stages and eight disciplines of the Meta- Model, c. Collaborative, inclusive, consensus-building change processes. These processes should be congonant with the human values orientation of the change goals and create levels committed buy- in necessary to successful projects. A critical element in the success of change management contracts is the depth of relationship between the project leader and process facilitator that is generated in their formulation. Relationships of mutual high equity built upon straight talk, curiosity, and consensus decision- making create profound feaming from the sometimes deeply personal and emotional deliberations that are a part of the change process. 2. Data Gathering ‘Once the initial contract has been establishey, the prudent change agent insists on a data-gathering stage. This process serves several purposes: a. It provides needed information for the effective planning of further Change Actions. b. It galvanizes organizational energy in preparation for "something happening " Cc. It provides an opportunity for some initial empowerment coaching of those from whom data is gathered Data is should be gathered about the following a. What's working in the targeted system? b, What needs improvement within the system? c. What has been done to attempt improvement? d. What barriers occurred to such attempts? e. Reactions to the change goals and reason for same. The information being sought is the general themes and pattems extant about the state of the system and its readiness for a particular change goal. This data will direct the formation of the strategic and tactical plan for the change project. From this data, needs of the system which could act as resistance to the change need to be considered in their own right and can be planned for and engaged. This is not the only time that data will be gathered during a change project. The data gathering process is continual as discussed below under the principle of Sound and Current Data 3. Interventions. Implcit in the idea of the empowerability of human systems is the assumption that through improving relationships within the system the leaders and members of the system can begin to identify and resolve their own issues and in the process create whatever change they wish. Thiscould mean improving the relationships and resolving conflicts between system structures, between ‘groups, and between individuals. At the intrapersonal level, some change action is often needed to help resolve the internal conflicts that bedevil many system executives and managers. Interventions, then-as a stage in the total change process and often referred to in the change management literature as interventions-are those actions designed to improve relationships within the target system on behalf of opening communication, and developing more informed anc inclusive decision-making processes. Interventions include. in their various forms, feedback to the system, team-building, strategic planning, training, conflict management, and coaching, ‘Two important skills needed to design and carry out these interventions include group facilitation and conflict management. Those two skill sets require deep use of our listening and straight-talk capacities, A systems orientation wherein we act from a perspective that keeps in mind impact on the entire system is essential. Of course, the ability to use ourselves flexibly and congruently with any particular situation is fundamental, Use of self and a system orientation are notable as the first two change management disciplines described in the sections below. 4. Evaluation ‘As much an ongoing process as a specific stage, the Evaluation stage informs the change agent and the system about the results the change project or specific change actions have had. In essence, evaluation is a feedback based dalz-gathering process- feedback which will give the change leaders critical information about how the system has responded to a change action and how they might design the next action to be more effective. This concept is notably different from the use of feedback as a means- generally, ineffective-of getting someone to change. Feedback is more useful as a means of determining the quality of relationship that has or has not been stimulated by a particular change action, Feedback is essentially an evaluation process that can also be used to gather data about what can make a more effective next change action, Evaluative processes can be as simple as asking someone or a group how well something worked and what might work better next time. More formal group processes can take a form where everyone takes a turn responding to an evaluative question (such as, what did you learn about managing change this weekend?). System-wide evaluations might be done at the end of a change project and periodic intervals after that to see how much staying power some systemic change might have. It is a good idea to have evaluative feedback processes built into a system's ongoing routine to monitor the specific and general wellbeing of that system. 5. Disengagement Little discussed in the change management literature is the process of completing or ending a change project. A typical disengagement process for the participants in the change project might include @ closing evaluation session, statements of leamings gleaned from the project, and celebration of whatever success was achieved, In addition, the change leaders-task leader(s) and process facilitator(s) should get together to formally agree that the project is completed or otherwise at an end. Additional and more personal feedback might be shared in this meeting about what worked well, what worked less well, and what might be done differently in a future project. Some celebration would certainly be in order Appropriate closure and disengagement allow the system and the people in it to learn from their experience in the project and to lel go of what has been completed to move effectively on to whatever is nextThe Disciplines of Managing Change in Human Systems On behalf cf creating effectiveness within each of the prescribed stages of change, the following eight disciplines are offered. The disciplines directly support the notion of the empowerability of human systems and the people that live and work within them. Accordingly, they also support the use of collaborative strategies and tactics aimed at open communication, and consensual decision- making 1. Ise of Self The primary tool that anyone wishing to manage change in a human system uses is the configuration of intellectual, emotional, and physical energies that that particular person brings to the situation, That includes her personality, her various abilities (particularly her ability to lear), and idiosyncrasies, Most of us have only begun to recognize and develop full command of ourselves. Most of us respond to many situations automatically. These automatic or habitual responses are the result of over-leaming. Over-leaming is the extrapolation of an appropriate learning from past experiences and applying it too broadly to every other set of similar situations. Over-leaming gives us a’shotgun’ approach to life where the impact of many of our intentions fall far from our intended results The way we define parts of ourselves as OK and parts as not OK is another hindrance to effective Use of self. Too offen we deny the large portions of ourselves that we define as not OK. We want to see ourselves as male, not female or female, not male. We want to see ourselves as ‘nice,’ never 25 ‘mean In this manner, we deprive ourselves of the inherent flexibility that comes with the multiple aspects and attitudes that make up our fundamental integrity. We often judge ourselves too harshly. In the processes of effective change management we need all the personal flexibility we can muster. How we use ourselves in one situation with one person is not likely to be very effective in another, though similar situation or person. A part of that flexibility is the ability fo notice when we might be mistaking our assumptions for real data. This is a pervasive pitfall in the world and in managing change in human systems. Effective use of self calls for learning how to be aware of and direct our own thoughts, our emotions, and our behavior. As we move toward mastery, we will be more and more able to behave in such @ manner that the systems within which we wish fo manage change will espond in ways consonant with our goals and intention 2. Systems Orientation A fairly pervasive approach to change defines a goal, then sets out in as straight a tactical line as possible to get there. Such an approach tries to ignore or run-over any intervening or obstructing variables like the fact that several people don't want the goal to be reached or don't appreciate the tactics being used. A systems orientation to change management looks at human systems holistically. it understands that any change within a system will reverberate throughout the entire system and impact even seemingly unrelated parts of the system. Using a systems orientation we. a. Understand that systems are comprised of constellations of forces that must be aligned for efficient and successful change projects. %b. Widen cur perspective from our immediate goal to one that considers the entire system. c. Orchestrate several coordinated change actions simultaneously. 4. Develop feedback loops sufficient to staying in touch with the impacts of our change strategies and their specific actions Here are some things to think about to help you think systemically: a. Universal Connectedness: everything is connected to everything else-things, processes, thoughts, feelings, and actions. There is nothing happening that isn't connected to everything else. b. Mutual Responsibility for things to be the way they are everything must be the way it is; therefore, responsibility is always mutual. Those who see themselves as “doing nothing” are contributing to the way things are by “doing nothing" just as much as what everybody else is doing c. Sufficient Sound and Current Data: needed to determine the boundaries of the system that contains both the problem ard the solution. Look to a larger system definition when problems seem intractable, 4d. Leverage Points: that accessible point in the system that will create the greatest impact toward the desired change with the least effort or pain. The most important leverage point is the person whose system it is. Build a high equity relationship with that person to contribute to their success. If the system is yours build a support system you can count on to help you create success. e. A Powerful Reframe: a systemic perspective takes away the too popular notion of single-point fault and blame allowing an easier transition to the infinite perspective. For example, pain reframed from a systemic perspective is a signal for healing rather a trigger for anger and fear. 1. A Function of Consciousness: We are too often consciousness of only a very limited part of ourselves and a very limited part of all that is going on around us. An effective systemic-orientation calls for being present to a much larger portion of ourselves and what is going on around us, Only then will we begin to perceive systemic connectedness. 3. Sound and Current Data An efficient and successful change process naeds good information for effective planning and decision-making. Such a principle, though obvious, is sorely needed as a reminder against mistaking our assumptions for accurate information. Our needs for being "right," being seen as "smart," for not wanting to rock the boat or upset the boss often overwhelm our need for sound and current data, Accordinaly, many change efforts suffer irom insufficient and inaccurate information while others fall prey to power struggles having to do with whose information is right and whose is wrong. A related pitfall occurs when the need for conformity prohibits needed data from coming to the surface ‘An environment of openness, straight-talk, truth, and honesty can be built from effective conflict management and team-building processes. In these ways a safe environment can be created which is the only environment in which Sound and current data can openly exist. 4, FeedbackFeedback is information from our environment about how itis responding to us. It is sound and current data that is available fo us at all times though we are often paying insufficient attention to notice it. Feedback allows us to evaluate how well the impact of our behavior is congruent with our intentions. The more we can fine-tune our behavior to be in sync with our intentions the greater will be our effectiveness as managers of change. People often attempt to use feedback as a direct means of changing someone's behavior. in fact, it is not very good at that. Feedback offered from that intention is often heard as criticism which, as often as not, generates defensiveness and resistance rather than the desired change. Corollatily, when someone says to you, "May I give you some feedback?" Duck! As important as feedback is, managing it effectively calls for understanding two principles: a, Feedback always says something about the giver, nol necessarily anything about the receiver. Consequertly, let your initial response be curiosity about what's going on with the giver, then decide what your next course of action might be b. What is done with feedback is solely in the hands of the receiver. Consequently, be curious about why you are choosing to react the way you are, then choose a response that might more effectively get you what you want. Kurt Lewin offered the formula: behavior is a function of people in an environment Too often we manage our behavior solely on data from our intemal belief systems. Effective change management calls for paying close attention to the feedback from our environment (including of course the people in it) So that we can adjust our behavior to get the response we wish from those around us. 5. Infinite Power Traditional change management approaches often call for identifying the person or people who are not in accord with a change project and fixing or replacing them with people who are. This process typically leads to a series of finite, win/lose power struggles that change little and waste much systemic energy on non-productive activities, Noting that win/lose processes will in the long run always generate lose/lose resulls, an alternative approach would be to focus on infinite, winhwin change goals and strategies. An important aspect of playing infinitely is to focus on changing the quality of relationships within the target system rather than trying to change or fix members who do not seem in accord with a proposed change. This is directly refated to the processes of conflict management and team- building mentioned in previous sections. Foc.ising on changing the quality of relationships rather than trying to fix or change people or ‘groups of people minimizes the need for power struggles. Open, collaborative decision-making processes are enabled during which most individual needs can be met while focusing on developing strategies and tactics aimed al the change goals 6. Learn from Differences Differences are the only sources of learning we have. When used for leaming, differences are the progenitor of synergy wherein the whole is greater than the sum of its parts. Too often, however, differences are used too finitely to determine who wins and who loses. Accordingly, they are the source of wasteful power struggles or creativity-deadening conformity aimed at avoiding powerstruggles. Too often, organizations overvalue conformity-those with critical information or new or differing ideas are wamed not to "rock-the-boat” making Sound and current data a rare commodity The Bay of Pigs and Challenger disasters are but two highly dramatic examples of this phenomenon. New, differing, and needed ideas are too often stifled by our need to be safe within finite organizational cultures The ability to leam from differences is a critical use-of-self skill for change leaders. it will support them in maintaining the systemic, non-judgmental perspective necessary to use the differences within their systems for the learning and synergy needed to collaboratively invent an effective change process. Given our socialized propensity toward operating from the finite perspective, this is more easily said than done. The infinite perspective helps as it allows change managers the support of strong and long-lasting partnerships and teams. Such support is doubly critical when the stress of change has moves us swiftly back to the traditional, conformity-oriented way of operating With support a speedy retum to leaning from differences can then be provided as needed 7. Empowerment ‘The client and his/her systern have the power they need to manage change within their system once their energies are released through effective, infinitely-oriented processes that support learning from differences though good conflict management and team building skills. The potentia’ success of many change projects is often minimized by system authorities or change agents who believe that they must make the change happen rather than empowering the systems, the groups of the systems, and the individuals of the groups to make the change Critical aspects of empowerment are the experiences of choice and influence. As | experience my behavior having influence, | will begin to experience choice about how I respond to my environment Consequently, | begin to experience myself as powerful. The more powerful | feel the more | will contribute my skill and energy to those who support my experience of choice and influence Personal empowerment without effective leadership, conflict management and team building, however, can lead to chaos. Groups are the fundamental unit of human systems. Successful systemic change, then, calls for personal empowerment within the context of group empowerment: both within the context of decision-making parameters that support the success of all 8. Support Systems The ability to develop support systems is crucial to effective change management for two reasons. First, systemic planned change will occur when the support for that change reaches critical mass among the members of that system. The success of your planned change efforts depends on our ability to develop empowering partnerships across a full range of differences using the infinite perspective of power. Second, applying eight disciplines to five stages of change management is a daunting task Those who choose to take on this task must develop strong support systems. Change in human systems is never created alone. Support systems are required. An initial support system might be one or two confidants. This small informal group might evolve into a larger group willing to take direct a land contribute to the critical mass that is crucial to success. W cannot manage systemic change alone. Develop support systems to help you strategize and operationalize your change strategy and to support you in using yourself effectively.A Series of Articles from William Bridges liam Bridges is an internationally known speaker. author, and consultant who shows individuals and organizations how to deal more productively with change. The most recent of his fen books is anew and expanded second edition of nis best-seller. Managing Transitions (2003). and the updated second edition of Transitions (2004), which together have Sold over one milion copies. Before that he published The Way” 0 Transition (2000), 8 partly autobiographical study of coming to terms with profound changes in his own life and transforming them into times of self-renewal THE THREE QUESTIONS Getting ready to talk to the executive director of a large non-profit organization the other day, | found myself jotting down three questions that | wanted to ask her. | realized that | had been using these questions with clients, in one form or another, for some time now but had never written them ‘out and reflected upon why | was using them, When | did so, I realized how central they are to my practice. Here they are: 1, What is changing? 2. What will actually be different because of the change? 3, Who's going to lose what? Here is why | think that they are so important 1, What is changing? It sill surprises me how often organizations undertake changes that no one ‘can describe very clearly. “What's changing? | ask. “We're changing the whole way we manufacture our product.” Or, "We're developing a world-class HR infrastructure." Or, "We've come to believe that tis time to rethink the way thal we go to market competitively and differentiate ourselvas from the other niche players in our industry. And, also, blah, blah, blah.” ‘The trouble with these answers is that they convey a very unclear picture of the change to those who have to make it work. Now, in fairness to the speakers, itis often true that at an early stage in the process they themselves have only a vague idea of what, specifically, is going to have to change. The planners know only that there needs to be change in respanse to some threatening presence or some great opportunity “out there." But until that vagueness can be cooked out of the undertaking and until the leaders of the change ‘can not only explain it clearty, but do so in a statement lasting no longer than one minute, there is no way that they are going {o be able to get other people to buy into the change. Longer explanations and justifications will also have to be made, of course, butitis the one-minute statement that will be the core of people's understanding, Don't get me wrong. | am not urging you to do a Readers Digest version o! all your strategic plans. I'm only saying that the successful leader is @ person who can take a complex change and reduce it to statements that are readily comprehensible to the people who are going to have to make the changes work. The Communications Department may offer editorial help, but the statement itself needs to express the understanding and intention of the feader. So the first thing to check is whether there is, in lect, a short statement describing and justifying theintended change, one that doesn't use jargon. (Whats a "world class HR infrastructure,” anyway?) ‘And be sure that the statement ties the change to whatever situation itis that makes the change important. The way we often say that (o our clients is, “Sell the problem before you try to sell the solution." In other words, don't try to make a change to meet a challenge, solve a problem, or seize ‘an opportunity unless you have already established the challenge, the problem, or the opportunity in people's minds. Remember: one minute! 2, What will actually be different because of the change?: ‘Explaining the what and why of the change is essential, but it is not enough. | go into organizations where a change initiative is well underway, and | ask what will be different when the change is done—and no one can answer the question. One of my students arrived to run a transition management seminar at a large oil company and asked, in all innocence, what was going to be different because of the change. "We thought that you were going to tell us,” replied the room full of managers. Many change projects are designed and launched at such a high level in the organization that all the planning is unrelated to the everyday, operational details that make up the lives of most workers. In such cases, the decision-makers offen have no idea how changes will actually make anyone's life or job, or even the function of a whole department, different. Yet that is all that people need to know before they can embrace and support a change. Leaders find this frustrating, "The workers can't even see the crisis the organization is facing!" they growl, True, But who is responsible for that fact? Leaders are paid to understand the organization's larger problems, but at most companies the people under them are paid to do their jobs. When we tell the leaders that they ought to share the state of the business, in all its financial detail, with their followers, they say, "That'll just worry them. Besides, they don't need to know that stuf to do their jobs.” A change may seem very important and very real to the leader, but to the people who have to make it work it seems quite abstract and vague until actual differences that it will make begin to become clear. Some of those differences will be behavioral (answering cusiomer complaints within 24 hours, for instance), while others will be structural (realigning sales teams by product rather than region or reducing the layers between CEO and line workers from twelve to five), The drive to get those differences clear should be an important priority on the planners’ list of things to do. If the differences simply cannot be spelled out at this time, then tell people how they will be established (by whom, using what criteria?) and when the differences will be explained. If you miss that date, by some mischance, explain why you missed it and give a new date, The thing to remember: Say what you'll do and do what you say. 3, Who's going to lose what?: The previous two questions, as important as they are, concem the Change—the shift in the situation. The transition—the psychological reorientation that the people must go through to make the change work—does not start with a new situation. It starts when the affected people let go of their old situation. Endings come first. You can't do something new until you have let go of what you are currently doing. Even the transitions that come from "good" changes begin with /osses of some sort, for letfing go of the old way is experienced by the people who were used to it as a foss.For that reason, we often say in training programs that you don't cross the line separating change management from transition management until you have asked "Who will lose [or has lost] what’ Some of our clients resist asking that question. “That's negative,” they say. "We want to be positive about this change.” Or they argue, "Let's don't talk about what is ending. What we want them to understand is the new things that are beginning." Or they rationalize: “It isn't as though they were going to lose their jobs. it's just a reorganization, for heaven's sake"—as if leaving the team or the boss you've worked with for a year weren't a loss. Sometimes they argue, "If we talk about losses, ‘we'll just trigger off a lot of bitching and moaning," or that "I don't think that loss-stuff has even occurred to them. We don't want to be putting ideas into their heads. ‘There must be a hundred othes versions of this objection to dealing with endings and losses, but they are all variations on a single theme: the mistaken idea that the best way to get people through a transition is to deny that they are even in a transition. In fact many communications projects are based on this central misconception that you can (and should) talk people out of their reactions to the change. Transition management is based on another idea: that the best way fo get people through transition is to aifirm their experience and to help them to deal with it It is not a question of agreeing with people or being nice to them. Itis simply a question of understanding how the world looks to them and using that as the starting point in your dealings with them. ‘When you do that, you bring issues out on the table, build trust and understanding, and give people the tools they need to move forward through a difficult time, When you speak to where people actually are in the transition process rather than telling them that they ought fo be somewhere else, you are bringing people along with you If, on the other hand, you deny endings and losses and act as though they did not need to let go of anything, you are sowing the seeds of mistrust and talking in a way that simply convinces people that you don't know or care anything about them. That is nol your intent, of course. But that is why "Who is going to lose what?” is such an important question For itis by asking that question, that you open the door to the transitions that people will have to make if the change is to work. Its that question that helps them to let go of the old way, so that the new way can be established and work. More than half of "communication" is the result of listening rather than speaking. That is why three questions are So important in a time of change 1. What is changing? 2. What will be different because of the change? 3. Who's going to lose what? They not only create a climate of listening which reassures people and defuses opposition, They also generate information that you may not, yourself, know yet. And, hey, you're in transition too,ORGANIZATIONAL RENEWAL Wilkam Bridges ‘A whole book could be written on the way that repeated changes are today sapping the energy and confusing the purpose within corporations and public institutions. Many of the initiatives launched by leaders—initiatives that are intended to lead to organizational renewal—all too otten simply add to the burden of change. The new strategic, structural, and or cultural plans are all meant to bring new life to the organization, But few of them do justice to the natural renewal sequence of letting go, embracing and exploring the time between realities, and then setting off on the chosen path to the future. Like individuals, organizations can repress the future just as they repress the past. Repressing the past creates subjects that cannot be discussed, s0 it creates problems that cannot be addressed, Repressing the future blocks the organization's path to its destiny and leaves it buffeted by constant change. Organizational leaders fail to appreciate these problems because they went through their transitions back when the organization was first trying to come to terms with its challenges. The decision to make whatever change the organization is making was for them the last stage of their transition. That decision and the first steps taken to implement it are their beginning, but the for the people who haven't to this point been in transition, that same decision and those same steps represent ar ending to the way things were. If leaders do not understand and compensate for how far ahead of people they are, their followers will have an especially hard time with transition and the change itself may be jeopardized, For a change can work only if the people affected by it can get through the transition it causes successfully. Organizations in Transition, Vol 13, #3TRANSITION AS ‘THE WAY THROUGH’ William Bridges One of the main points | always try to make in presentations on transition is that itis not the same as change. In organizations, this distinction is confused by the way the word, "transition," is used: they talk about transition teams and a transition plan and transition services—which turn out to he help for when you find yourself out on the street. As | see if, most of these items are really focused fon the change that is happening to you, not the transition you are experiencing Transition is not just a nice way to say change. Itis the inner process through which people come to terms with @ change, as they let go of the way things used to be and reorient themselves to the way that things are now. In an organization, managing transition means helping people to make that difficult process less painful and disruptive. The recently published The Way of Transition (2001) tells about my own recent journey through transition—triggered off by the death of my first wife, Mondi. In writing the book—and then in discussing it with readers—I came to understand another dimension to transition. | remember particularly a radio show call-in that | had from a man whose wife, like mine, had died of cancer. "| Just can't get over it" he said with great feeling. "How do | get over it?” As he talked, | had a picture of his wife's death as a high wall that blocked his path, a wall that he was struggling to climb over. That is the way change often feels in our lives: like a barrier across our path, a disruption of our plans, a big hole that’s opened up at our feet. Naturally, we look for a way to "get over it Getting through transition is not easy, but unlike the change-wall, transition represents 3 path to follow. To change your attention away from the change-barrier and toward the transition-path, you need to start where the transition itself starts: with letting go of the inner connections you had to the way things were. The question that aways helps you to shift your focus from the change to the transition is, "What is it time for me to let go of?” In the case of my wife's death, what | had to let go of wasn't so much the person | had been married to for 37 years or the marriage we had had. Those were the changes, To cross over the line into the transition, you need to ask yourself what inner relinquishments you'll need to make because of the change. What needs will you have to find other ways to gel met? Because of your change, what parts of yourself are now out of date? If your change was the loss of your job, what might you have to let go of? Let's see: a regular income, @ group of colleagues and friends, a regular place to go every moming, a way to use your talents, a way 10 structure your time, a bunch of plans for the future, @ way to get appreciated. You'd also lose an identity~or ai least an answer to the question, "What do you do?" Those are the things that losing your job would force you to do without So, what is it time for you to let go of? (Yes, ! mean you...now) In some area of your life, you are probably in transition right now, so that isn't a hypothetical question. I've always found that asking that question opens up the path | have to follow. It aften is a path I'd prefer not fo have to follow, but given the change, | don't have much choice. Fortunately, itis also a path that often leads to personal growth. In what sense, could it be time for you to tet go of that particular way to Use your talents? in what way are you outgrowing the identity that you've been trading on for these past years? And if youcan't get appreciated any longer in your old work situation, is that loss in any sense a timely one? ‘Such questions give you a place to start, a path to follow. Every one of them suggests some learning, some discovery that may lie ahead, Each of them represents a gate in that change-wall that blocked your path 1am not suggesting that this is a path that you wanted to take or that you will necessarily find it enjoyable. | am Saying that itis a path with meaning for you, that following it will bring you out somewhere. What | am saying is that, since change is a wall and transition the gate in that wall, it's there for you to go through it. Transition represents a path to the next phase of your life Organizations In Transition, Vol 14. #3General Strategies of Change Change as an organizational process has been studied within a behavioral science context for well cover 50 years. Some of the early Westem researchers in this area (including Kurt Lewin, Ron Lippit Warren Bennis, Kenneth Benne, and Robert Chin) focused their early research on identifying the range of anpraaches used to guide and frame charge efforts In 1984, Chin and Benne authored an article summarizing what they saw as an overall framework cataloguing the then-utiized approaches to change management. The framework has remained an often cited guide to change practice and a useful tool for analysis of potential approaches to change strategy development ‘Within the Chin and Benne framework, the broad area of change management is divided into three “general strategies” (hereafter referred to as “meta-strategies”) of change: 1) empiricat-rational, 2) normative-reeducative; and 3) power-coercive. Each of these meta-strategies approaches the planning and implementation of change from different philosophical and practice-based sets of assumptions. Empirical-Rational Strategy The initial underpinnings of an approach to change are based on the assumptions of the initiator concerning the nature of the individuals or system to be changed. Chin and Benne's first meta- strategy builds on the fundamental assumption that people are rational. ‘The implication is that, once presented with information that demonstrates that a particular change is in their selFinterests, they will accept the change as a means of achieving that interest. In its implementation, this strategy works as follows: a change is put forward by an individual or group who believes that what they are proposing is desirable and in keeping with the self interests of the roup that will have to change. In the process of putting forward the change proposal, the proposer(s) rationally justify the change, pointing out those elements linking it to the interests of the group and showing how both the group and the individuals will benefit from the change. The underlying assumption of this approach is that if the arguments and the rational data are presented in an effective manner, the group will support the change because rationally it supports their self- interests Although the rational-empirical approach to change focuses on the use of information as a primary change motivator, the overall methodology uses a variety of sub-strategies to move change forward. Included in those originally identified by Chin and Benne were basic research and the dissemination of knowledge (through such mechanisms as academic and popular journals and presentations), selection and promotion of personnel based on a consistent knowledge base, and the use of systems analysts as generators of information about organizational dynamics. A more recently documented strategy (Burdus and Miles: 2000) focuses on the use of technology (Intemet and IT networks) as information generators and transmission strategies. The increased ability of managers fo ensure that members of their organizations have access to new information as it become available provides a new and immediate mechanism supporting change. These technological mechanisms suppor the basic tenet of the rational-empirical approach to change that with sufficient information, system, Members will support changes that are logical in nature, Common Assumptions of a Rational-Empirical Approach to Change 1. People are rational and driven primarily by self interest.2. If the right information is put forward in an engaging and convincing manner, people will see the wisdom of the change and act in support of the proposal. 3, Information should be gathered by “expert” professionals, fo ensure that itis accurate and reflects modem methodological protocols. 4. Transfer of information, once gathered, is primanly a one-way process. Senior representatives of the system (or their expert representatives) communicate “the facts” and help recipients understand, 5. Dialogue is in service of “understanding”, not redefining or changing the facts as discovered and promoted by the experts. Normative-Reeducative Strategy A second meta-strategy focuses on normative-reeducative approaches to change. This typology differs markedly from the rational-empirical approach outlined above. It is, based on the premise that individuals (and human systems) are necessarily active in their search for need satisfaction and self-ulfillment and that change is largely values-based as opposed {o rational in nature. Change is motivated, according to this approach, when the individuals identity ‘some level of dissatisfaction with the status quo based on fundamental value clashes. The key task of those who follow this approach to change is. Not to find the right information to guide a rational change process but to find a proper and effective relationship between the values of the system (and its members) and the values of the organizational environment. The search is guided by active experimentation and the direct, involvement of as many members of the system as possible as a primary methodology to the development of the change strategy A primary assumption of this approach is that intelligence is “social” rather than rational Protagonists hold that only through intense interaction between the players in the system can the optimal change strategy be discovered, developed, and adopted with commitment. Successful change strategy must take into consideration the surrounding culture of the environment. Such Considerations include attention to the broader system, including socially determined meanings and norms and the personal where internalized meanings, habits, and values of the members dominate Common Assumptions of a Normative-Reeducative Approach fo Change 1. Involvement of the members of the change syslem in working out programs of change under their own direction. 2. Definition of the change problem includes the probability that shifts in attitudes, values, norms, and relationships between players in the system end between the system and its external environment may be required. 3. Relationship of management and the menibers of the system is one of mutual collaborators in the development of the final strategy and not one of power dominance by any one segment of tne system, 4, Deeper level assumptions and dynamics of the system (power, privilege, and personality) are examined as part of the change process. iy5. A sub-goal of the change process is fo improve the overall skills of the system (o direct its own change processes in the future. Such elements frequently conflict with the rational data generated by fact-based research ‘Change as defined by this approach, therefore, extends beyond the development of common understandings that people have at a rational level to incluxfe the deeper personal meanings that each carries with them at the level of habits and valves. At the organizational level, changes driven by the normative-reeducative approach focus on alterations in how organizations define the normative or “right” way to structure relatianships, roles, and the personal meanings that individuals. accep! about human systems and their missions in the world. Typical focuses of change include improving verall organizational problem-solving, personal growth and development of system members, either as individuals or as part of cadres within the system (such as executive or middie management groups), and more recently, redesign or restructuring of organizational systems to maximize member participation and involvement as noted in Weisbord (1991) and Emery (199). In the world of normative-reeducative change, arrival at common definitions of organizational values and norms is generally the preliminary step to change efforts. The process is driven by intense and Uusvally personal exploration on the part of organizational members of deeper level assumptions and beliefs, resulting in personal and organizational clarification of organizational norms through active discussion, interaction, and exploration. This contrasts with the rational-empirical approach where the change process represents an intellectual engagement with data and information supportive of a new vision of how the system should operate. The commitment to change through a rational-empirical approach is a commitment to what is most logical and effective, even if the rational outcome contradicts some of the deeply held values of the organization’s members. As can be appreciated, changes of a normative-reeducative kind generally take longer to carry out. Once initiated, however, and established in a social system, their effects tend to be much more deeply felt ‘over a longer period of time. Recent research covering North America, Europe, and Australia (Emery, 1998) indicates that, where members of a system feel that they can have a direct impact on the way the system operates, broad indicators of organization effectiveness, including output and employee morale, tend to be positively affected. Powar Coercive Approaches to Change Elements of power can be found in all approaches to change. In the rational-empirical approach, ower is based in the information or knowledge that is used as a prime mover of the change. In this, approach, those who possess the knowledge hold power in the system, Judicious use of information represents a clear application of power within systems change driven by knowledge. In Normative- reeducating change, the underlying philosophy of change focuses on the development of a personal sense of power and the sharing of organizational power through the active involvement of system members in problem definition and solution generation ‘The Pewer-Coercive strategy emphasizes a different approach and different elements of the power process. In general, this approach fo change emphasizes the use of political and economic sanctions as the principle strategy to bringing about change, although the use of “moral power also historically forms a key element of the strategy (Benne and Chin, 985) Common Assumptions of a Power-Coercive Approach to Change 1. Power is legitimate and carries rights with it — people should listen to those who hold power. i2. Those with power have the responsibilty to give direction fo others in the system. Itis not Significant that those others do not accept the direction that they are receiving as appropriate or correct, 3. Those who hold power have the righl fo punish those who do not follow their directions. 4. The best interests of the organization are served naturally by following the directions of those who are more senior in the hierarchy — they naturally, or through dint of their experience, know what is best Political / Positional Power as a Change Strateay Political or positional power involves the ability to create policies, directions, laws and other legal agreements that bring with them legitimate sanctions for non-compliance, Threat of sanction has the impact of increasing the willingness of system members to follow the directions of those who hold the power and engage in the change that they mandate. in addition to the economic and other sanctions that tend to be associated with this approach to change, many individuals are influenced by deeply held cultural beliefs concerning the legitimacy of senior ‘members of the hierarchy to give direction to members of the systems for which they nold responsibility. The aura of legitimacy of the power source is sufficient, in these cases, to reduce resistance to imposed change. In such cases, a power-coercive way of making decision is accepted as the nature of the way the system operates. Economic Power as a Change Strateay The use of economic sanctions represents a logical extension of political power. Under a political power scenario in the broader social context, sanctions generally focus on jail and other personal liberty sanctions. Under the economic power strategy for change, the rewards (and sanctions) focus ‘on the provision (of withholding) of financial incentives, Organizations can differentially reward members for their active implementation of new methods of management or new approaches to dealing with issues. Govemments can dole out (oF withhold) funding from organizations in retum for their willingness to comply with new policy directions. This last example represents a combination of political power (the right to set policy directions) and economic power (the ability to fund the new directions and to withdraw funding from other practices now seen as outmoded). Specific strategies of Power-Coercive Change range from overthrow of political regimes through non-violence, the changing of organizational management through stakeholder pressure and the “power of the Annual Meeting’, the use of public policy and legislation to force organizational change, and the use of “moral suasion” to embarrass management into appropriate action. Classic examples of such strategies would include Ghandi's efforts to overthrow the British in India, Saul Alinsky's radical work in the Chicago ghettos and Lee lacocha’s management approach at Chrysler All used different applications of power strategies to force change — and all were effective in affecting the systems within which they were working, Alll of the above outlined meta-strategies (rational-empirical, normative-reeducative, and power-coercive) represent approaches to bringing about change in human systems. While few change processes draw exclusively from onie of the three, most base their approaches in one of the three camps and use tactics from the other two to initiate change efforts or propel them along at significant moments. When viewed through the lens of these three frameworks, patterns can b seen in the preferred and predominant approaches to change chosen by organizational systemsaround the world. This is particularly true in public sector organizations where expectations of transparency and emerging demands for greater stakeholder impact on decision-making processes have become increasingly strident (Paquet, 1999: 71) Reference Classic Theories ~ Contemporary Applications: ‘A comparative study of the implementation of innovation in Canadian and Chinese Public Sector environments Michael Miles School of Management, University of Ottawa ‘Arun Thangaraj ‘Canadian Transportation Agency ‘Wang Dawei Beijing Petroleum Managers Training Institute Ma Huigin Beijing Petroleum Managers Training Institute